Czech Republic Making Strides Forward in Money Laundering and Terrorist Financing Fight: MONEYVAL Report
According to a recent report by the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL), the Czech Republic has made substantial progress towards combating money laundering and terrorist financing. The country’s efforts have been praised, moving from “partially compliant” to “largely compliant” or “compliant” for several Financial Action Task Force (FATF) recommendations.
Significant Improvements
After being encouraged to address specific deficiencies in areas such as:
- Sanctioning regime for breaching preventative measures
- Non-profit organizations
- Reporting obligations
- Tipping-off
- Compliance of designated non-financial businesses and professions (DNFBPs) with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations
The Czech authorities have now implemented a series of legislative, regulatory, and institutional measures to rectify these concerns. Let’s explore these improvements in more detail below.
Assessment Highlights
The latest evaluation of the Czech Republic reveals the following improvements regarding FATF recommendations:
- Fully Compliant: Six out of the total forty FATF recommendations have been completely implemented.
- Largely Compliant: Twenty-nine recommendations have been nearly fully implemented, with some minor deficiencies.
- Partially Compliant: Five recommendations remain to be fully implemented; these include targeted financial sanctions, virtual assets, cash couriers, and statistics.
To further understand the Czech Republic’s progress, let’s explore what this assessment entails for each FATF recommendation.
Fully Compliant Recommendations
| FATF Recommendation | Status |
|---|---|
| Recommendation 2: Customer due diligence | Fully Compliant |
| Recommendation 4: Record-keeping | Fully Compliant |
| Recommendation 5: Suspicious transaction reporting | Fully Compliant |
| Recommendation 6: Terrorist financing–Customer due diligence definition | Fully Compliant |
| Recommendation 10: Client identification | Fully Compliant |
| Recommendation 31: International cooperation | Fully Compliant |
Largely Compliant Recommendations
The Czech Republic has largely implemented the following recommendations but still requires addressing some minor deficiencies.
| FATF Recommendation | Status |
|---|---|
| Recommendation 1: Policymaking and coordination | Largely Compliant |
| Recommendation 3: Risk assessment | Largely Compliant |
| Recommendation 7: Political offenses | Largely Compliant |
| Recommendation 8: Internal controls | Largely Compliant |
| Recommendation 11: Simplified and non-face-to-face business relationship | Largely Compliant |
| Recommendation 12: Obligations for a DNFBP in respect of a wire transfer order, electronic funds transfer or similar order | Largely Compliant |
| Recommendation 13: Obligations for a DNFBP for the physical conduct of a financial or trade business | Largely Compliant |
| Recommendation 14: Obligations for a DNFBP for the act of safekeeping and administration of a life insurance policy and the conducting of activities related with the contract of reinsurance | Largely Compliant |
| Recommendation 15: Obligations for a DNFBP for the administration of collective investment schemes | Largely Compliant |
| Recommendation 16: Protecting the integrity of the correspondent banking system | Largely Compliant |
| Recommendation 17: Secureness of funds and related records | Largely Compliant |
| Recommendation 18: Transactions to or from high-risk countries | Largely Compliant |
| Recommendation 19: Other forms of financial business | Largely Compliant |
| Recommendation 21: Wire transfers | Largely Compliant |
| Recommendation 22: International cooperation | Largely Compliant |
| Recommendation 24: Reporting and record keeping procedures | Largely Compliant |
| Recommendation 25: Obligations for DNFBPs | Largely Compliant |
| Recommendation 26: Freezing and confiscation | Largely Compliant |
| Recommendation 27: Mutual legal assistance | Largely Compliant |
| Recommendation 32: Terrorist financing preventive measures | Largely Compliant |
Areas Requiring Further Work (Partially Compliant)
There are still some FATF recommendations that require more attention and work:
- Targeted financial sanctions.
- Virtual assets.
- Cash couriers.
- Statistics.
MONEYVAL will be expecting a report from the Czech Republic on further progress in implementing AML/CFT measures within a year.
Conclusion
These improvements in the Czech Republic’s compliance ratings are a testament to the Czech authorities’ commitment to combating money laundering and terrorist financing effectively. It is important to note, however, that this assessment only evaluates the formal changes in legislative, regulatory, and institutional frameworks and does not assess the practical implementation of these reforms.
Keep an eye on our blog for more updates on the progress of the Czech Republic and other countries’ efforts to prevent money laundering and terrorist financing.